UOB Group currency strategists note that GBP / USD could move within the 1.3460-1.3710 range in the coming weeks.
Key Comments:
24 hour view: “Yesterday, we held the view that GBP / USD ‘could move above the main resistance at 1.3700, but a sustained rise above this level is unlikely.’ The pair subsequently rose to a high of 1.3703 before making a surprisingly strong and fast sell-off (prior day low of 1.3544). Rapid decline appears to be ahead of itself but shows no signs of stabilizing yet. Risk is to the downside, but for now, any weakness it is considered part of a range of 1.3500 / 1.3620. In other words, a sustained decline below 1.3500 is unlikely ”.
Next 1-3 weeks: “GBP / USD rose above 1.3700 (1.3703 high) yesterday before making a surprisingly strong sell-off. The breakout of the ‘strong support’ at 1.3560 (prior day low of 1.3544) has invalidated our view of GBP / USD moving towards 1.3750. The upward pressure has subsided and the current move is considered part of the consolidation phase. GBP / USD could move between 1.3460 and 1.3710 over a period of time. “
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